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FTSE Russell Reviews Nigeria’s Frontier Market Upgrade Over Settlement Concerns

Nigeria’s planned return to the FTSE Russell Frontier Market Index has hit a new hurdle.

FTSE Russell has placed the country’s reclassification under further review after Nigeria moved to a faster stock settlement system.

The London-based index provider had earlier approved Nigeria’s return from “Unclassified” to “Frontier Market” status. The change was expected to take effect in September.

But FTSE Russell now says Nigeria’s new T+1 settlement cycle may create challenges for foreign investors.

The provider said it will announce the outcome of the review by the end of August.

Why FTSE Russell Is Reviewing Nigeria

The concern is about how quickly stock trades now settle in Nigeria.

On June 1, Nigerian Exchange Limited moved from T+2 to T+1 settlement.

This means equity trades now settle one business day after the transaction instead of two.

The change aims to make Nigeria’s capital market faster and more efficient. It also aligns the country with markets such as the United States, Canada, and India.

However, FTSE Russell is worried about how the change affects international investors.

Foreign investors usually need to convert foreign currency into naira before buying Nigerian stocks.

With only one day to complete settlement, some investors may need to pre-fund trades before execution.

FTSE Russell says this could weaken Nigeria’s rating under its Delivery versus Payment settlement standard.

Why This Matters For Nigeria

Nigeria’s return to the FTSE Frontier Market Index was expected to support investor confidence.

Many global fund managers track FTSE Russell classifications when deciding where to invest.

A successful return could make Nigerian equities more visible to frontier market investors.

It could also help attract foreign portfolio inflows into the stock market.

That is why the review matters.

A delay or reversal could slow Nigeria’s effort to rebuild trust after years of foreign exchange challenges.

How Nigeria Lost Its Status

Nigeria lost its Frontier Market status in 2023.

At the time, foreign investors faced difficulty moving money in and out of the country.

Foreign exchange shortages, capital repatriation delays, and currency restrictions weakened market access.

These problems made Nigeria less attractive to global investors.

Since 2023, the government has introduced reforms to improve foreign exchange access and restore confidence.

These reforms include naira liberalization, efforts to clear unmet FX demand, and wider financial market changes.

The FTSE approval in March was seen as a major sign that Nigeria was making progress.

The T+1 Problem

The T+1 settlement rule is not a bad reform by itself.

Faster settlement can reduce risk, free up capital, and make the market more efficient.

The problem is how it works in a market where foreign exchange access can still be complex.

Foreign investors need certainty that they can convert dollars to naira quickly enough to settle trades.

If they cannot, they may need to provide funds in advance.

That creates extra risk.

It also makes Nigeria less convenient compared with markets where foreign exchange and settlement systems operate more smoothly.

Foreign Investment Still Weak

Nigeria is still trying to attract foreign capital back into its equity market.

Foreign portfolio investment in Nigerian equities fell by 17.4% in the first five months of 2026 to ₦400.1 billion, or about $260 million.

This shows that offshore participation remains weak despite recent reforms.

Investors are still watching Nigeria’s foreign exchange market, policy stability, and capital repatriation process.

The FTSE review could add more uncertainty.

Market Operators Defend Nigeria’s Reforms

Nigerian capital market operators argue that the review does not fully reflect the country’s progress.

They say regulators have improved market infrastructure, technology, transparency, and settlement efficiency.

They also argue that the move to T+1 is part of Nigeria’s effort to meet global standards.

From their view, the new settlement rule should strengthen the market, not weaken it.

But FTSE Russell is focused on how the rule affects foreign investor access in practice.

That difference is now at the center of the review.

MSCI Is Also Watching

FTSE Russell is not the only global index provider monitoring Nigeria.

MSCI also removed Nigeria from its Frontier Markets Index in 2024 over foreign exchange liquidity and market access concerns.

Although MSCI has acknowledged some improvements, it has not yet restored Nigeria to its frontier index.

This means Nigeria still has more work to do if it wants full recognition from global market benchmarks.

What Happens Next

The next major decision will come by the end of August.

FTSE Russell will then decide whether Nigeria’s reclassification will proceed in September or face another delay.

For investors, the decision will be important.

For Nigerian regulators, it will be a test of whether recent market reforms can satisfy global access standards.

For the government, it will also show whether foreign exchange reforms have gone far enough to restore confidence.

Expert View

Nigeria’s FTSE review shows the difference between reform on paper and reform in practice.

The T+1 settlement system can improve market efficiency. It can also bring Nigeria closer to global standards.

But foreign investors are not only looking at speed. They are looking at ease of access, currency liquidity, and settlement certainty.

If faster settlement forces them to pre-fund trades, it may create a new barrier instead of removing one.

Nigeria must now fix the operational gap.

The country needs a settlement system that is fast, efficient, and friendly to foreign investors.

The return to FTSE Frontier Market status would be a major confidence boost. But it will only matter if investors can enter, trade and exit the market without unnecessary friction.

Frequently Asked Questions

What is FTSE Russell reviewing?

FTSE Russell is reviewing Nigeria’s planned return to Frontier Market status because of concerns over the new T+1 stock settlement rule.

What is T+1 settlement?

T+1 means stock trades settle one business day after the transaction.

Why is T+1 a concern for foreign investors?

Foreign investors may need to convert foreign currency into naira quickly before settlement. If that process is difficult, they may have to pre-fund trades.